Bangalore, India -- On Bangalore's crowded streets, hand-pulled carts compete for space with trucks, cars, and make-shift food kiosks, often bringing traffic to a snail's pace. The heat, the grime, pollution, and potholes on the road make the city quintessentially Indian. But look closely. Cheek by jowl with the noisy bazaars of Bangalore are swanky design and development facilities set up by both multinational and Indian companies. In the cubicles in these premises is where Bangalore's technology innovation thrives, as the city's information technology engineers do software development, design integrated circuits, and even develop products.

Texas Instruments Inc. was the first multinational company to set up a development center in Bangalore in 1985. After TI, a number of multinational companies from the US, Europe, and Japan have set up design and development centers in Bangalore.

For a while after Microsoft Corp. set up its software development center in Hyderabad in 1998, it looked like Bangalore was losing out on new foreign information technology investments to Hyderabad, which is the capital of the neighboring state of Andhra Pradesh, and to Chennai, the capital city of another neighboring state, Tamil Nadu. By 1999, the trend was however reversed when Intel Corp., Sun Microsystems Inc., ZiLOG Inc. and a number of other companies set up design and development centers in Bangalore.

"Sun's decision to set up the center at Bangalore was primarily influenced by two areas in which Bangalore stood out compared to Chennai and Hyderabad, in that order -- availability of people with the right skills, and ability to attract people from anywhere in the world to Bangalore," said Bhaskar Pramanik, managing director of Sun Microsystems' operations in India. Sun's India Engineering Center in Bangalore is an extension of the corporate engineering center in the US, and is expected to be the largest outside the US by June, 2001. "The work being done here is not just in sustaining or support, but in areas which will impact future Sun products and technologies," added Pramanik.

Bangalore is now also home to a large number of Indian technology companies, including Wipro Ltd., one of the country's largest information technology products and services company, and software services company, Infosys Technologies Limited. These companies built up their revenue, primarily by doing contract work for multinational information technology companies like Microsoft, Nortel Networks Corp., and SAP AG, and large, multinational users of information technology.

New entrepreneurs here are, however, focused on creating and licensing intellectual property, and they have not gone unnoticed by multinational companies. Intel, for instance, has invested in Sasken Communication Technologies Ltd., and in early 1999 acquired Santa Clara-based Thinkit Technologies Inc and its Bangalore-based subsidiary, Software & Silicon Systems Pvt Ltd.

Even before the multinational companies discovered Bangalore's potential as a design and development location, Bangalore was already a key location in India for the electronics industry, primarily because the Indian government located a number of government-owned electronics companies and defense research institutions in the city. Besides information technology and communications companies, Bangalore has a large number of manufacturing companies making automobile components, electronic connectors, and a variety of precision engineering products.

But the city did not anticipate the technology boom, and the attendant infrastructure bottlenecks, such as shortage of power and housing in the city. With an area of 366 square kilometers, Bangalore now has a population of 5.2 million, which continues to grow.

New business opportunities, such as the outsourcing by US and European vendors of Internet-based customer relationship management (e-CRM) to Indian companies, are also extending the benefits of globalization to plain college graduates who until recently were left untouched by the technology boom in the city.